Deregulation evokes uncertainty.

• Author: Ross, Ian
• Position: Electric utilities - Brief Article

'No guarantee' rates will remain stable in open market

The only thing certain about the way Ontario's open electricity market will shake out, whether rates will rise or fall, is that it's uncertain. Like a number of municipal utilities, the Sault Ste. Marie Public Utilities Commission (SSMPUC) is wrestling with a number of issues which include a slew of still-evolving regulations governing the proposed new relationships and conduct between retailers, suppliers, billing agencies and the Independent Marketing Operator, set up to run the new market, says Clyde Healey, manager of administrative services for the SSMPUC.

"The water's starting to settle a bit but it's still a bit opaque in places," says Healey.

"Any transition is less than smooth," Healey says. "This is something we've never done before."

Healey says there's no guarantees that deregulation, or re-regulation" as he prefers to call it, will keep electricity rates stable.

"As a distribution company, we have no control over costs and we can't guarantee what is going to happen. It's a free commodity and it's going to move." Healey maintains the province has been far too ambitious in implementing a complicated process involving so many players.

"They're trying to accomplish a great deal in a short (two-year) time period," Healey says.

The competitive electricity market, which will allow customers to buy power from any generator or broker who can offer the best price, was to open in June. Instead the province bumped it to November, and now it appears Ontario will introduce competition in electricity sales sometime in 2001, says Healey.

Stan Pawlowicz, interim general manager of Sudbury Hydro, says the task facing municipal utilities to gear up for the open market has been "monsterous" and complicated by local municipal government restructuring.

"In theory, (deregulation) means electricity should be cheaper because of more people entering the market, but we all know what capital costs are like today, and those costs have to be recovered out of the market," Pawlowicz says.

"I think it's going to be difficult not to have price increases, but from the utility sector we're mandated to operate without a rate increase for a three-year period, and we're committed to that. But that's only for the distribution component."

David Wills, president of North Bay Hydro, has been struggling to make sense of what will happen and is critical of the province for introducing what...